What is probate?

Probate is a court supervised transfer of your property to your heirs. Many people mistakenly think that only having a will avoids probate. The opposite is generally true. Having only a will almost guarantees that your assets will have to be probated.

A probate is triggered by a person dying who owns over $150,000 in assets in his or her name alone that are not otherwise disposed of. A probate is necessary when some institution refuses to allow the beneficiaries to sell or cash in an asset of the decedent without “letters testamentary” from the probate court. In other words, the only person who could access the account or other asset is dead, and so you have to get the “letters” from the probate court to prove the court has given you the power to take over control of that asset of the decedent.

A Probate Means Delay. The time it takes to get your assets to your heirs varies from county to county in California. Generally, a probate in Ventura County takes at least 12 months. On the other hand, property in a living trust generally can be distributed in a few short weeks.

A Probate Is Expensive. Attorneys charge large fees on a probate. The fees range from 2-4% of the gross value of your estate. The executor’s fees will be the same amount unless the executor waives them. Also, court costs and appraisal fees are added.

The California Probate Code sets the statutory attorney’s and executor’s fees. Additional fees can be ordered by a court for more difficult cases. The statutory fee is determined by a formula that is $7,000 on the first $200,000 in assets plus 2 percent on the excess (up to a limit). Hence, a $600,000 estate would trigger $15,000 in attorney’s fees. The executor may, but does not have to take, the same fee for his or her services as executor. There are also court filing and legal notice fees and a fee paid to the probate referee. Tax preparer fees are also necessary, and will vary depending on the size, complexity, and number of beneficiaries of the Trust. Other costs typically involve insurance premiums for real or personal property and occasionally a bond fee if required by the court. Such fees are paid out of the estate.

A Probate Invades Your Privacy. Anyone can go to the court clerk’s office and find out a surprising amount of information about the deceased and his or her family. A living trust, on the other hand, avoids such an invasion of privacy. No probate is needed if the living trust is set up and maintained properly. With a living trust, only your heirs and your attorney will know about your affairs.

On the other hand, a properly created and maintained living trust avoids probate. When you are gone, your successor trustee simply pays your last bills, reads your trust to see who gets your property, and then distributes the property. This all occurs without reporting to the probate court.